Leaving a legacy to your family is a beautiful way to pass down more than just wealth—it’s a way to share values, wisdom, and love across generations. It gives your loved ones not only financial security but also a sense of continuity and purpose, showing them that they are part of something bigger than themselves. A legacy is a lasting reminder of your life’s work and the care you invested in their future.

Start with Professional Guidance 

Having a conversation with an Estate attorney would be a great place to start. They can help you review your options and determine if a trust is appropriate or not. Having a trust is probably one of the most secure and efficient ways to distribute assets effectively after you are gone. You may not have thought about it before, but there’s a significant difference between a trust and a will, especially when it comes to how quickly your assets will be available to your family. While a will and a trust both allow you to direct where your assets go, a trust offers a key advantage: it helps your estate avoid probate.

Every state has its own probate system, and if you pass away with only a will or no will at all, your estate will likely go through probate—a process that can be lengthy and costly for your loved ones.

By setting up a trust and ensuring your assets are properly titled under it, you can bypass the courts and probate altogether. This allows your beneficiaries, such as your grandchildren, to receive their inheritance more quickly, with fewer expenses, and without the need to make the details public.

Life Insurance 

Another way to leave a meaningful financial legacy is through life insurance. There are many different types of life insurance. Nowadays, it’s more common to see term-life insurance. However, if you want a more permanent solution that would be a whole life policy. Having outstanding debt can become a huge burden for a grieving family, so having money available to cover these bills can alleviate some financial concerns. Here are some common debts life Insurance can help cover after ones passing: 

Mortgage: Since most homes or apartments aren’t paid off immediately unless you have significant cash reserves, your beneficiary can use the life insurance payout to continue making mortgage payments if you were to pass away unexpectedly. This ensures they can stay in the home without the financial burden of the mortgage looming over them.

Car payments: Keeping up with your car payments is a good idea. Even if no payments have lapsed, a life insurance death benefit can provide your loved ones with the financial support needed to stay current on car payments.

529 Plans – A Great Financial Legacy 

Contributing to your grandchild’s education can be a valuable contribution to your family’s future, both by improving your grandchild’s future and relieving the burden on your children – it is a great idea. Money grows tax-deferred and is federally tax-free when taken out and used for qualified education expenses.

Starting in the 2024–2025 school year, distributions from a 529 account owned by a grandparent will no longer be considered income for the student on the Free Application for Federal Student Aid (FAFSA). This change means that, generally, using a 529 account to fund a grandchild’s education will not impact their eligibility for FAFSA-based financial aid. 529 Plans offer a broad range of investment options offered in the plan, including enrollment-based portfolios that change automatically as the target year approaches.  The limit on contribution amounts is set very high as well often $400k or more! 

529 Plans are also very flexible as they can be transferred to another beneficiary, for instance, if one grandchild gets a full ride soccer scholarship and doesn’t need the money, it can easily be transferred to another grandchild who does, no penalties involved. Also, starting in 2024, if both grandkids got a scholarship and don’t need the money, you will be able to roll over funds from a 529 plan to a Roth IRA (as long as it has open for at least 15 years). This transfer will be subject to various rules, including, the regular annual IRA contribution limit, plus a $35,000 lifetime maximum. This alternative allows you to help your grandchildren get a jump on preparing for retirement if they don’t need help funding their education.

Be sure to review any 529 college savings plan offered by your home state or your beneficiary’s home state, as there may be state tax or other state benefits, such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s plan. Please note that the plan’s disclosure document includes investment objectives, risks, fees, charges and expenses, and other information that you should read and consider carefully before investing.

Gifting Your Money/Assets 

Gifting assets is a thoughtful way to help loved ones benefit from your wealth while you’re still alive. One effective method is through gifts that qualify for the annual exclusion from gift tax, often referred to as “annual exclusion gifts.” These gifts are completely tax-free and do not require you to file a gift tax return.

For 2024, the annual gift tax exclusion is $18,000 per recipient, an increase from $17,000 in 2023. This exclusion applies separately to each person you gift to, meaning you can give this amount to multiple individuals without triggering gift taxes.

While recipients won’t receive a step-up in cost basis for the assets, any capital gains they incur will be taxed at their rate, which may be lower than yours.

Many choose to gift to children or grandchildren through custodial accounts set up under the Uniform Transfers to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA). Be aware, however, that depending on the child’s earned income and student status, account earnings may be taxed at your tax rate rather than the child’s. Other options include opening a joint account with the minor or purchasing savings bonds in the child’s name.

If you’re considering charitable giving, bequests to charities offer an additional advantage—they are fully deductible from ordinary income and are not subject to any limitations.

Another lasting legacy is in the form of lifestyle. When interviewing one of our clients they said, “Some of the best things that my parents left me were an appreciation for what I had, and not expecting—or wanting—a lot of material things. Family was important. Religion and church was important. Hard work was expected, and it helped me develop good life skills.”